The Business Council of Australia wants a serious overhaul of higher education.

The major lobby wants all Australians to have a lifelong entitlement to study university and vocational courses.

It wants the government to create new universal lifelong skills accounts that allow every Australian to dip in and out of education throughout their working lives.

Currently, “funding is distorted, it creates the wrong incentives, and it's basically unfair,” BCA chief Jennifer Westcott said in a Press Gallery address.

She used nursing as an example, where where universities course can be offered with a $40,000 subsidy and over $90,000 in income-contingent loans.

Meanwhile, a student at a vocational institution can usually only borrow $15,000, and have access to far lower levels of subsidies, or none at all.

“It stands to reason that students weighing up those two options would pick the heavily subsidised higher education qualification - even if they were better suited to the VET course,” Ms Westacott said.

“How is that in their interest or the public interest?”

The council says the system should be fundamentally changed so that funding belongs to the learner, who can decide which provider and course they want.

The lifelong skills accounts would replace all existing subsidies and loans schemes, which currently total about $20 billion each year.

After acquiring a first qualification, Australians could then pick further subjects across the university and vocational systems.

The BCA says the future workforce will require constant upskilling, and for workers to effectively assemble their own credentials.